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A South Korean church group has scrapped plans to display Christmas lights near the border with North Korea after residents voiced fears Pyongyang might shell the illuminations, officials say.

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The Military Evangelical Association of Korea had planned to set up the giant display on three tree-shaped steel towers on hills near the heavily-fortified border.

The proposal required approval from the defence ministry as the hills are within three kilometres (two miles) of the frontier.

According to the ministry, local residents had protested the plan on the grounds it might provoke a military response from North Korea. As a result, the church group agreed last week to shelve the proposal.

"We respect the group's decision," a ministry spokesman told AFP.

Before the South's "Sunshine Policy" of engagement with North Korea launched in 1998, the seasonal lighting displays were common.

Pyongyang repeatedly condemned them as "psychological warfare" aimed at spreading Christianity to the isolated socialist North.

In 2004 the two Koreas agreed to halt official-level cross-border propaganda and the South stopped the Christmas border illuminations completely.

They were resumed in 2010 after North Korea shelled a frontline island, but were postponed last year in a conciliatory gesture following the death of North Korean leader Kim Jong-Il.